NEPRA swiftly approves fixed charges for domestic consumers

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has approved the government’s plan to reduce industrial electricity tariffs by removing a cross-subsidy of Rs4.04 per kWh — a move that will place an additional financial burden of over Rs100 billion on middle- and high-income electricity consumers of DISCOs and K-Electric through the imposition of fixed charges.
NEPRA held a public hearing on February 10, 2026, presided over by Chairman NEPRA Waseem Mukhtar.
According to the plan presented to the regulator — applicable from the current month — the government will impose fixed monthly charges ranging from Rs200 to Rs675 on over 28.5 million residential electricity consumers to generate approximately Rs101 billion.
Protected consumers using up to 100 units per month have been exempted from the Rs200 fixed charge. Under the plan, a Rs200 fixed charge will apply to about 9.9 million consumers using up to 100 units, while a Rs300 charge will be imposed on over 6.1 million protected-category consumers using up to 200 units per month.
For non-protected consumers who exceed the 100-unit threshold even once within six months, a fixed charge of Rs275 will apply to around 5.7 million users, with their per-unit tariff exceeding Rs22.44, excluding taxes.
Consumers in the 200-unit slab will face a fixed monthly charge of Rs300, affecting around 2.24 million users. The fixed charge will increase to Rs350 for 2.9 million consumers using 201–300 units, while about one million consumers consuming 301–400 units will pay Rs400 per month.
Approximately 400,000 consumers using 401–500 units will be charged Rs500 per month, while those consuming over 500 units will face the highest fixed charge of Rs675.
According to NEPRA, the Power Division submitted that in view of the existing structural misalignment between the determined revenue requirement of the power sector — where a substantial portion comprises fixed costs — and the predominantly volumetric recovery mechanism under the current tariff structure, coupled with the significant expansion of off-grid solar, it has become necessary to rationalize the tariff framework.
The present volumetric tariff model has placed a disproportionate recovery burden on certain consumers, leading to increased cross-subsidization and migration to alternative energy solutions. Accordingly, while remaining within the determined revenue requirement and approved subsidy limits, a recalibration of fixed and variable charges has been proposed to ensure equitable cost recovery and the long-term financial sustainability of the grid. As part of this restructuring, fixed charges for all domestic consumers — except lifeline consumers — have been introduced or revised.
The Ministry of Energy (Power Division) also presented a comparison of the power sector’s cost and recovery structure, explaining that approximately 73 percent of total costs are fixed in nature, whereas only about 7 percent of such costs are currently recovered through fixed charges.
The Authority carefully considered the submissions made by the Federal Government in its motion, along with comments from stakeholders during the hearing.
NEPRA noted that the current end-consumer tariff design is predominantly volumetric, with over 93 percent of the total system cost recovered on a per-unit (Rs/kWh) basis and only 7 percent recovered through fixed charges (Rs/kW per month). However, capacity payments to generation companies, along with NTDC/HVDC costs and other infrastructure expenses, are fixed obligations payable monthly, irrespective of electricity consumption. These fixed costs constitute a significant portion of the total revenue requirement of distribution companies.
Thus, a mismatch exists between the incurrence of costs (fixed in nature) and the recovery mechanism (consumption-based). The National Electricity Plan provides that fixed charges should be progressively incorporated into tariffs of all consumer segments to account for at least 20 percent of fixed costs.
With the rapid penetration of rooftop solar and other renewable energy sources, grid-based electricity demand is declining. This shift has necessitated a gradual transition from a volumetric tariff structure toward a more fixed-cost-oriented model.
Accordingly, fixed charges ranging from Rs200 per month to Rs675 per month have been levied or revised for domestic consumers, excluding lifeline consumers. For domestic consumers using above 300 units and Time-of-Use (ToU) consumers, the increase in fixed charges has been offset by a corresponding reduction in variable charges.
The amount recovered through fixed charges will be utilized to reduce the existing cross-subsidy for industrial consumers, resulting in a reduction in their variable tariff ranging from Rs1 per kWh to Rs4.58 per kWh across different categories.
The Authority further noted that under Section 31 of the NEPRA Act, it is guided by the National Electricity Policy, the National Electricity Plan, and any guidelines issued by the Federal Government while determining, modifying, or revising tariffs, charges, and terms and conditions for electric power services.
The Power Division stated in its motion and during the hearing that the proposed revision of the Government of Pakistan’s applicable uniform tariff remains within the determined revenue requirement of Discos and the already budgeted Tariff Differential Subsidy (TDS) of Rs249 billion.